Traders are once again betting on stocks with high short interest as a new meme frenzy hits the market. This activity could lead to multiple companies becoming the next targets of a short squeeze. Shares of GameStop, Reddit and Robinhood all rose sharply on Monday after the retail investor “Roaring Kitty” that sparked 2021’s epic short squeeze appeared online for the first time in about three years. The phenomenon could mark a comeback this month as the market attempts to reignite the “meme stock” craze, with the S&P 500 rising 3.6%, while the 30-stock Dow Jones Industrial Average and the Nasdaq Composite rose more than 4%. . Short selling is a common practice among hedge funds, but not the only one, and occurs when investors borrow shares and then sell them to buy them back later at a lower price. The investor then returns the borrowed shares and takes the difference as profit. A short squeeze occurs when a stock price surges and forces those who are short a stock to buy shares or cover their shorts, buy back shares and cut their losses. This usually drives up the stock price further. To find the next potential short squeeze candidate, CNBC Pro used FactSet data to search for companies listed on the NYSE and Nasdaq that have short interest as a percentage of the float of 25% or more and a market capitalization of at least More than $250 million. Take a look at the names below: Solar company SunPower’s short interest as a percentage of float was recently around 95%, the highest of any stock on the screen. Solar stocks have come under pressure, with SunPower’s stock price plummeting more than 40% this year, as many solar companies rely on borrowing to finance their growth plans due to concerns about persistent inflation and high interest rates. However, the stock rose more than 22% on Monday. Short interest in Maxeon Solar Technologies, another solar company, accounts for about 45% of outstanding shares. The company makes photovoltaic panels and its stock price has plummeted more than 65% this year and about 25% this quarter. Maxeon shares jumped more than 17% on Monday after the company said it would delay the release of financial results for the fourth quarter of fiscal 2023 and the first quarter of fiscal 2024 from Wednesday to May 23. At 41.3%, shares of were shorted. The stock has fallen more than 15% so far this year. Goldman Sachs on Thursday maintained a sell rating on Beyond Meat and cut its price target by 50 cents to $3.50 after the company missed its first-quarter profit forecast last week, meaning the stock could fall about 51% next year. Children’s Place is another short squeeze target, with 70% of its float sold short. The troubled children’s clothing retailer’s shares are up more than 73% this month but are still down nearly 48% for the year. The company has been working with advisers and lenders to improve its liquidity and balance sheet, but its margins have been struggling due to high levels of promotional activity.
